Global Macro Trading Journal

Quote from Martinghoul:

Actually, having checked my sources, it appears I am mistaken. The Eurozone is actually running a pretty hefty trade deficit w/China. Hmmm, I wonder where I got the idea that they're net flat. I stand corrected.
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Good man. :)
 
Quote from Martinghoul:

Kyle Bass is silly... Just like the other overly publicized people that periodically show up on TV to tell everyone their deep thoughts on all sorts of subjects, he just tells stories that sound plausible, but, on reflection, prove very superficial. Generally, I find there's really too many top-down storytellers out there.
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That's just an ad hominem post, based on pure assertions rather than any evidence. If Bass is wrong, show the facts and data that contradict his views, or find the holes in his arguments.
 
Quote from Martinghoul:

Of course, the regime may change... However, the key elements are still in place. The Eurozone is a trade-neutral area. Specifically, it's not running a trade deficit w/China. On the other hand, the Chinese are still desperate to diversify their FX reserves away from USD. In fact, given the above, if all they do is maintain the % share of the EUR in their total reserves constant, they'll be buying in pretty chunky size, day in, day out. So, unless you expect the EUR and/or the whole diversification concept to go away, shorting EUR is a dangerous game.
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A position in any risk asset is usually a dangerous 'game'. If it wasn't, you'd have a risk-free one-way bet.

In 2010 we saw a 30 handle fall in the Euro despite China continuing to buy. In 2008 we saw a 35 handle fall in the Euro despite China continuing to buy. Therefore, Chinese buying is not something that will prevent a major collapse in the Euro.
 
Looks like I missed the boat on the Bund completely. At this point I wouldn't even buy it anymore, given that both France and the EFSF debt have been going down I'm not sure the Bund is all that safe from declines either
 
Quote from Martinghoul:

Kyle Bass is silly... Just like the other overly publicized people that periodically show up on TV to tell everyone their deep thoughts on all sorts of subjects, he just tells stories that sound plausible, but, on reflection, prove very superficial. Generally, I find there's really too many top-down storytellers out there.
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WTF? Have you checked with his investors. I don't think they find him silly.

You want bottom-up? How about "Whit" Tilson - the guy wouldn't know what macro was if it slapped him upside the head. Loses money for his investors quarter after quarter.

BTW, the full 30 minute interview is available, and Bass explains himself a lot more. His "asymetric" bets (mortgages blowing up, periphery blowing up, now Japan blowing up) are nearly free hedges against what is otherwise a mostly long portfolio.

This guy purchased CDS on RMBS for practically nothing in 2005-06. He then purchased German paper in 2008, paying for it by selling Greek paper (costing him carry of about 10 bps, that one has only blown out about 100X). Now he's purchased nearly free protection on a Japan bust-up. Silly indeed.

Possibly the most ignorant post you've ever written.
 
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